The Longtail of Banking

This article
from the Economist on the unbanked doesn't use the term, but what
they're talking about is th long tail of retail banking. I have a
friend who, a while back, didn't have any bank accounts. His life
wasn't pretty.

I've always had a jaundiced view of check cashing
establishments--they seem to prey on the poor (and mathematically
challenged). On the other hand, I have a friend who runs an
emergency dental outfit and many of their customers are "unbanked."
Teaming up with a check-cashing outfit allowed them to offer services
to these folks--who usually don't have the cash on hand, don't have
credit, and need their teeth fixed right now--while managing the
risk.

I have a pretty conservative (Republican?) view of it, however. The market will
chase the excessive profits these establishments seem to make and
narrow that gap until the price reflects a reasonable profit after
accounting for the risk. Evidence? The Economist article mentions
El Banco de Nuestra Comunidad, which targets check-cashers by
undercutting them. Imagine that!

By the way, the article also mentions Wal-Mart's banking plans, which
apparently include Utah. Recent legislation in Colorado attempts to
stop
Wal-Mart and similar banks. I think that's a big mistake. Any
time you've got an established industry trying to legislate an
upstart (if you can call Wal-Mart an upstart) out of existence,
it's probably an attempt to maintain the status quo at everyone
else's expense.